Cabinet Approves ₹10/Quintal Increase in Sugarcane Price for 2026-27 Season to Support Farmers.

The Cabinet has approved a new Fair and Remunerative Price (FRP) for sugarcane at ₹365 per quintal for the 2026-27 season, marking a ₹10 increase from the previous year’s price. This adjustment, the lowest hike in three years, was announced following a meeting of the Cabinet Committee on Economic Affairs (CCEA). The increase represents a 2.81% rise from the prior FRP of ₹355 per quintal, with a stipulation that for every 0.1% improvement in sugar recovery above a basic rate of 10.25%, the FRP will increase correspondingly. The decision aims to cater to approximately one crore sugarcane farmers and maintain the operational viability of sugar factories.

The increase in FRP is significant as it addresses the income of farmers engaged in sugarcane cultivation, potentially leading to an additional ₹15,000-20,000 crore in cane payments, thereby stimulating rural demand. However, while the Indian Sugar and Bio-energy Manufacturers Association (ISMA) has welcomed the hike as a positive step towards farmer welfare, farmers’ groups like the Bharatiya Kisan Union have expressed dissatisfaction, deeming the increase insufficient given rising production costs for diesel, fertilizers, and labor. The dynamic between the sugar mills, farmers, and the government necessitates a delicate balance to sustain the agricultural economy and ensure timely payments to farmers.

In the longer term, the government and the Reserve Bank of India (RBI) may need to consider a more comprehensive pricing strategy that accounts for the total cost of production (C2 costs) plus a sustainable profit margin for farmers. As the industry continues to recover from past challenges, exploring a proportional revision in the Minimum Selling Price (MSP) of sugar and ethanol procurement rates could provide sugar mills with the financial leeway necessary to absorb higher raw material costs. This would not only ensure the sustainability of sugar production but also enhance the overall welfare of farming communities, aligning with broader objectives of agricultural profitability and rural prosperity.